Motivision is raising at a $7 million valuation. I believe this is a reasonable valuation given that the company has already developed the software to initiate a pilot rollout. The company has also been accepted into the Techstars 2023 cohort, adding further validation to the company’s products and growth strategy.

When analyzing market upside, investors must look at how the company’s business model fits into the overall industry market size. Motivision charges $500 per device and collects a $150 licensing fee per location per year. According to IBISWorld, there are 115,000 gyms and fitness centers in the U.S. The average gym will buy between 25 and 100 devices for an average of 63. At $500 per device, the market size specifically from tablet purchases is approximately $3.6 billion. And from a recurring revenue perspective, the market size is about $17.3 million. This doesn’t even take into consideration the potential for Motivision to be implemented in home gyms, which could expand the market size even further. I believe that the market upside is there for the company to become a 10x investment opportunity.

I got the chance to speak with Motivision founder and CEO Omri Melamed to learn more about the company’s growth strategy. I was impressed with his knowledge of the space and the path forward to begin bringing his product to market. While he doesn’t have previous experience running a company, I believe he is poised to be a successful first-time founder. 

The other co-founders are Nike Klara and Tamir Gez. Nike has previous experience in traditional finance roles and will add significant value on the business operations front. Tamir has a very impressive background and is considered the company’s “machine learning guru.” He has an extensive background developing algorithms for Samsung vision cameras and other software/hardware companies. He has clearly been instrumental in developing the backend technology for Motivision, and having him as a co-founder will be invaluable as the company grows. 

There are a couple other companies that have developed products similar to Motivision’s. They are all relatively small, and no legacy company has brought a product like this to market. 

The company’s main competitor is Perch.fit. Perch uses very expensive cameras and is focused more on selling to professional weightlifting gyms and high-level college gyms — not the everyday consumer gym chains that Motivision targets. Of course, there is always the risk that Perch could pivot and begin selling its products to retail gyms, but it’s not happening now. Additionally, no other company has attempted Motivision’s plan to install cameras in the ceiling of gyms to track the continuous movement of gym-goers. 

Motivision’s main indirect competitors are fitness wearables like WHOOP. But these devices are very bad at tracking movements in the gym, particularly when it comes to weightlifting. Motivision clearly offers a superior product.

Motivision has spent years successfully developing its movement-tracking technology and is now on the brink of launching in more than 25 private gyms in Texas and New York City. This will be an excellent opportunity for the company to see the product in action and gain valuable feedback from a number of small gyms before approaching the big names like Equinox and Lifetime. Additionally, gaining entry into Techstars is a remarkable achievement that the team must be commended for. Motivision’s performance will now hinge on the company successfully rolling out into the pilot gyms, quickly implementing feedback, and iterating the software. The company is projecting $300,000 in 2023 revenue. 

Investors have no way of knowing whether Motivision’s software/hardware rollout will be successful. There is no evidence yet that a large number of gyms are ready to implement this type of technology. I believe that Motivision’s success will rely on a large chain like Equinox picking up the technology and conducting a rollout. This will signal to other gyms that they need to purchase this type of technology to stay relevant, and the floodgates could open from there. However, there is no indication that this will be the case, which remains a key risk. 

Another risk is the company’s cash position. The company plans to roll out slowly from location to location to learn and gain valuable feedback from pilot customers. While I think this strategy is smart, it will also take a toll on the cash burn of the company if it takes too long to scale. And Motivision will be relying on this current fundraise and future fundraises to fund this growth strategy. In today’s brutal fundraising environment, the risk is even higher that the company may not get the funding it needs. 

I am a big believer in Motivision’s product. I love going to the gym and would be ecstatic if I got access to technology like Motivision’s. I actually avoid certain exercises because I am worried about injuring myself through poor form. If I had access to Motivision, I would be able to receive real-time feedback on my posture and feel more comfortable in performing my exercises. 

In terms of the investment opportunity, we simply need the company to become a $100 million to $150 million company to see a 10x return (accounting for dilution). The gym market alone will be conducive to Motivision hitting this threshold. However, I believe there is even more opportunity if the company enters the home gym market. This could happen through a partnership with a home gym app or equipment company. So Motivision has many avenues to potentially become a 10x investment. 

Additionally, Motivision implementing ceiling cameras and continually tracking the movements of all gym-goers is the real X factor here. If the company can successfully launch this iteration of the product, it would truly be the only company offering this and could catapult it to new heights.

Motivision represents a chance to invest in the potential future of gyms. The company’s technology — which monitors gym-goers’ movements and provides real-time feedback on their posture and form — is an impressive innovation. I believe that gyms will be chomping at the bit to get their hands on this type of technology and provide more value to their customers. While the road of continuous product iteration and development won’t be easy, I believe Motivision has the team in place to get it done.

Report written by KingsCrowd Senior Investment Analyst Teddy Lyons on May 18, 2023.